Charlie Munger: 'Every time you hear 'EBITDA' substitute it with 'bull**** earnings''

Warren Buffett and Charlie Munger speaking at the 2003 Berkshire Hathaway annual meeting.

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[BrunoFalconi]

Classic Munger! No BS filter. Wish we had more people like this in Finance.

[infintecuriosity]

This should be titled: ‘How not to ask a question.’

[Martinit]

If you think EBITDA is BS wait until you see "Adjusted EBITDA". It typically comes very close to Buffett's "Let's just put sales as net profit and all expenses in the footnotes".

[patrickbrussels]

Finance and Business books have been so helpful. I’m 55 and my wife 50 we are both retired with over $3 million in net worth and no debts. Currently living smart and frugal with our money. No longer putting blames on FED for our misfortunes. Saving and investing lifestyle in the stock market made it possible for us this early, even till now we earn weekly.

[miketurner]

RIP Charlie - you were a class act and a man of few words. When you spoke, we listened.

[Riggsnic_co]

Didn't Charlie Munger and Warren Buffett invent the strategy of buying/investing when the market is low and also buying/investing when the market is high? As Warren Buffet said, he has seen this happen many times in his life. Not an investor. My wife and i never earned more than a middle class salary. We plan to get retired at 58 with a stock portfolio worth $4M. We have never sold so much as one share of stock...

[garywatson]

“Somewhere between crazy and crooked.” Great line that sums it up.

[Aaron_R]

Depreciation is usually understated because if you are buying equipment, inflation will make it more expensive next time you buy the same peice of equipment.

[lailaalfaddil]

The most important thing that should be on everyone's mind currently should be to invest in different sources of income that doesn't depend on the government. Especially with the current economic crisis around the word. This is still a good time to invest in various stocks, Gold, silver and digital currencies.

[martinXY]

Every time I see these two speaking at a BH AGM it's like a masterclass in economics.

[mawgateway]

Asking multiple questions at a time is a pandemic of our current time. It's like the interviewer believes they will never be allowed to ask another question for all eternity, so better take your best shot now. No one in their right mind can remember 10 questions long enough to answer them all. If I was the one taking questions, I would never allow more than one question at a time with a maximum of two follow-ups.

[amane]

These two are national treasures !! Love Charlie no BS no filter

[harveytr]

This is fascinating. I qualified as a (U.K.) Chartered Accountant in the year that this was recorded. In the intervening two decades I’ve covered the question of EBITDA, I’ve done market-leading work on pensions accounting and US OPEBs and I’ve also been involved in stock option accounting under IFRS2.

It’s amazing how prescient these two guys were. They were bang on and I’m pleased to see that I’m not the only EBITDA skeptic out there.

[codacreator]

Refreshing to hear someone who not only know exactly what they’re talking about, but calls the shady practices of many businesses out as what they are: film-flam business. Think PG&E and the depreciation savings that decimated the lives of thousands of California families for the sake of high profit.

[windy]

Dude asked like 20 detailed questions at once. How can they keep track to answer all those lol

[robertleewhitt]

What Charlie is saying about pension plans is absolutely 100% true > what companies do is they hire an accounting firm ( that also includes executive compensation packages for the same company ) and build themselves a Chinese wall between the PBGC and the company and they use actuarial assumptions that are absolutely false and very misleading . Pension plans should be run basically with fixed income however companies use actuarial assumptions and investments that are in no way design for widows and orphans . The PBGC does nothing to stop these companies especially around the year 2000 to 2006 to stop companies from using actuarial assumptions that are not fiduciary responsible ! I am so glad that Berkshire Hathaway understands this principle when Charlie says companies have understated pension plans that’s extremely intelligent and insightful on Berkshire Hathaway’s part .

[sassysilver]

Yes. When I run a financial analysis for a business, I look at (4) metrics: liquidity ratio; leverage ratio; debt to equity; return on equity. That is all I need to know to understand the financial health of a business. This will tell me how much capital the business returns to its shareholders, and its cash flow. Also, I always remove goodwill from its equity and add in any owed tax liabilities to its overall debt.

[zendoc]

This is the strength of this country, where right in the midst of glitz and hype there is whole lot of sense and you have to do your due diligence to find it. Imagine all those people AKA Madeoff generation who invested with a guaranteed return hence got attracted it where they could have bought BH shares !!

[jeanlefranc]

Quite amazing when some CEOs complain to analysts that their company is undervalued in terms of Price Earnings Ratio when the only word you read in quarterly reports is EBITDA and you know the business is bleeding cash.

[salvation]

I could listen to theses men talk all day. What they say is what they mean. " no footnotes"